Sequoia Capital, which invested in WhatsApp, blogged this handwritten note, "No Ads! No Games! No Gimmicks!" "It serves as a daily reminder of their commitment to stay focused on building a pure messaging experience."

In the Forbes article there is a chart of initial 4 year growth which puts Facebook at 145 million users, and WhatsApp at 419 million users. By division I get a WhatsApp value per user of $45.35. WhatsApp has an annual subscription fee of $1.

So many of my friends are really, properly mad about this. Comments are along the lines of "Can i use anything without it being part of facebook? for fucks sake".

But in all seriousness, i have the same comment i had about the tumblr purchase. Other than that lots of people use this, why is this company worth this much? You can't really "buy" customers, people will leave if they ad or shit it up. Whatsapp isn't some money printing machine.posted by emptythought at 6:55 PM on February 19, 2014 [2 favorites]

Great. Now I'm learning about new things only because they're being acquired by Facebook.

Hunh. There's only 7 billion people on earth. Interesting limit to growth.posted by Diablevert at 6:57 PM on February 19, 2014 [5 favorites]

RonButNotStupid: "Great. Now I'm learning about new things only because they're being acquired by Facebook.

On the other hand, this just looks like a fancy front-end to XMPP, so what's the big deal?"

It directly links your phone number to your account. So you can't use it on an iPad for example. There is no need to find whatever your friends buddy names are because your phone book is your friends list.

Also in other countries outside of the US you get gouged out the ass for text messages. Paying a tiny bit for pre-paid data to send WhatsApp messages is a much better deal.

Almost everyone I met in Mexico and Europe used WhatsApp to communicate instead of text messages.posted by wcfields at 6:58 PM on February 19, 2014 [6 favorites]

You can't really "buy" customers, people will leave if they ad or shit it up. Whatsapp isn't some money printing machine.

Facebook is attempting to monopolise knowledge of people's social graph/relationships.posted by jaduncan at 6:58 PM on February 19, 2014 [27 favorites]

The way WhatsApp works is this. Mobile phone operators want to charge people money for data and then more money for SMS services. WhatsApp comes along and creates a service that uses data to replicate the functionality of SMS. Then WhatsApp sells this service very cheaply—$1 a year.

In the short-term this makes perfect sense as a business. Carriers will lose some money and that money will be divided up between consumers and WhatApp. Smart idea.

But how does this scale? Mobile phone operators aren't really selling consumers some voice service, some data service, and some SMS service. They are selling access to the network. The different pricing schemes they come up with are just different ways of trying to maximize the value they extract from consumers. In a world without WhatsApp, selling SMS separately from data is the best way to do that. Then along comes WhatsApp to exploit a hole in the pricing system. But if WhatsApp gets big enough, then carrier strategy is going to change. You stop selling separate SMS plans and just have a take-or-it-leave-it overall package. And then suddenly WhatsApp isn't doing anything.

If I'm reading it right, they collect $1 per user after one year from close to half a billion users. Facebook could grow that to a billion or more per year in revenue with minimal expense. That's a money printing machine, worth what they paid for it.posted by beagle at 6:59 PM on February 19, 2014 [3 favorites]

Facebook, like many other tech companies, are trying mighty hard to be "growth" companies rather than value companies. With this acquisition Facebook can claim it's still growing, and has a lot of runway left. Facebook can't organically add another billion users, but they might be able to buy their way there and spending 1/10 of their market cap to add 1/3 more users might seem smart seen from that very very specific perspective.posted by 2bucksplus at 7:03 PM on February 19, 2014 [2 favorites]

I have to imagine that Facebook's own internal analysis is predicting a high likelihood of the bubble bursting soon.

Acquisition prices make (at least a little) more sense when you frame things from Facebook's point of view. They're looking at it in terms of how much less valuable Facebook will [be perceived to] be once a viable not-Facebook establishes itself in the market. Their concern is the price of "lost" users that they're recapturing by buying up everywhere they could possibly go, to maintain a monopoly advertising (and profiling) position.posted by ceribus peribus at 7:04 PM on February 19, 2014 [3 favorites]

Of course, Yglesias is missing the other reason people are using WhatsApp -- their friends are and it doesn't suck. Unlike those crummy network SMS apps. And Yglesias.posted by notyou at 7:05 PM on February 19, 2014 [1 favorite]

Facebook can't organically add another billion users, but they might be able to buy their way there and spending 1/10 of their market cap to add 1/3 more users might seem smart seen from that very very specific perspective.

The growth is going to be in cheaper smartphones in developing economies -- just where WhatsApp was strongest.

Maybe in absolute terms those users aren't as valuable as first worlders, but margin is margin? It gives me a headache.posted by notyou at 7:08 PM on February 19, 2014

Hunh. There's only 7 billion people on earth. Interesting limit to growth.

At $1/year plenty of people can afford a second account if they want to segregate their communications for some reason.posted by Phssthpok at 7:10 PM on February 19, 2014

tonycpsu: The different pricing schemes they come up with are just different ways of trying to maximize the value they extract from consumers. In a world without WhatsApp, selling SMS separately from data is the best way to do that. Then along comes WhatsApp to exploit a hole in the pricing system. But if WhatsApp gets big enough, then carrier strategy is going to change. You stop selling separate SMS plans and just have a take-or-it-leave-it overall package. And then suddenly WhatsApp isn't doing anything.

Is there a carrier that doesn't work this way in the US now? Verizon forces me to buy texting, and all the prepaid MVNOs or other carriers plans i worked at also forced texting on me, and generally just unlimited texting. Some plans are good deals, some not so good... but they all just roll texting in by default. All you fudge around with now are the amounts of minutes Vs the amounts of data, and oftentimes they force minimums of both on you if you're doing a family plan.

WhatsApp is succeeding in the US despite this, not because people are canceling their texting plans and paying the low per-text rate and using this instead. Whoever wrote this is either living in a cave, or talking about places in europe/etc where you can actually just switch to the cheapest 100 texts plan or whatever and use whatsapp in an essentially exclusive manner.

And i'd say that the fact they were gaining big ground in the US proves that this is a bit of a made up issue anyways. Someone will undercut the big players trying to muscle more cash out of you for a forced-bundled package, and everyone will just flock to that when they can. Tmobile is gaining huge ground with that kind of thing right now.posted by emptythought at 7:11 PM on February 19, 2014 [2 favorites]

The most surprising thing for me in that post was the 32 engineers number. 32 engineers! Handling 50 billion messages a day! For 450 million fucking users! THIRTY TWO.

God damn it what I would give to be able to work at that kind of scale with no bureaucracy. Sounds like some kind of magical wonderland.posted by tracert at 7:14 PM on February 19, 2014 [29 favorites]

So it's an instant messaging app that uses your contact list as a buddy list? What exactly is special about that? Why hasn't someone come along and just made a totally free version of this, or a $1 non-subscription version? What's to stop anyone from doing that, and cutting WhatsApp's business model right out from under them?posted by Scientist at 7:15 PM on February 19, 2014

Never heard of it but I seem to be falling pretty far behind in this stuff lately.posted by octothorpe at 7:23 PM on February 19, 2014 [3 favorites]

Sequoia Capital's reasons why it went for $19 billion. IMHO, the only reason that it went for that much is that Zuckerberg is paranoid, and feels that his empire could crumble around him at any moment. This cost Facebook about 10% of their market cap, so clearly Zuckerberg thought there was at least a 10% chance of it taking down Facebook. And perhaps they think they can grow it and get revenue.

Also: 32 people is awesome. Also awesome that they had 450 million active users and I'd barely heard of it. I think it's rare that a Silicon Valley startup hits the international scene so much stronger than the local scene, and with zero spent on marketing. It's a testament to the viral nature of social networks, I guess.posted by Llama-Lime at 7:25 PM on February 19, 2014 [2 favorites]

We have a rival messaging app, but WhatsApp is the 800lb gorilla. It's well thought out but ultimately kind of lame without a killer feature or any useful proprietary technology. You could develop a competitor for under $10m, easily. FB are simply paying for the user base, nothing more and nothing less.

I had been meaning to looking in to this whole Whatsapp thing. I suppose now I've saved myself that time.posted by pompomtom at 7:26 PM on February 19, 2014 [1 favorite]

Llama-lime's post is on the money. This shows how vulnerable FB is. It's the old person's social network now, and Z is terrified someone's going to eat his lunch, which they will.posted by sweet mister at 7:28 PM on February 19, 2014

It's mostly Euros who has WhatsApp.. maybe Facebook hopes to push more Americans on it?posted by ReeMonster at 7:29 PM on February 19, 2014

So, the whole business model of Whatsapp is depended on the expensive cellphone texting? My personal experience has been that texting has gotten a lot cheaper lately especially on prepaid carrier( generally $30 for unlimited talk and text plus few hundred meg of data).

If Zuckerberg is going to pay 10% of Facebook worth to buy Whatsapp. What's he going to do about WeChat? In my opinion, WeChat is a better app with better monetization. Facebook can't exactly buy WeChat as it's owned by multi-billion dollars Chinese internet company.posted by Carius at 7:32 PM on February 19, 2014

WhatsApp is also big in India. But the other big gorilla in this space is Line. But yeah, FB overpaid for the userbase - the technology is nothing special.posted by nightwood at 7:33 PM on February 19, 2014

So it's an instant messaging app that uses your contact list as a buddy list? What exactly is special about that? Why hasn't someone come along and just made a totally free version of this, or a $1 non-subscription version? What's to stop anyone from doing that, and cutting WhatsApp's business model right out from under them?

Because, with the Facebook purchase the app reaches critical mass. It's like "how do compete with a 900million person user base? It's an understatement to claim that "that would be hard to do".

As for Facebook, I don't see any long term value in their platform, except for the value that Facebook stock has already brought to Founders and early investors - as well as those who bought in when Facebook was running at about $19 on the exchange.

People tend to forget that we are still in the very early stages of the Internet revolution; many more disruptions will follow. Let's see what Facebook looks like in 5 years. Maybe I'm wrong.posted by Vibrissae at 7:34 PM on February 19, 2014 [1 favorite]

It seems like once the main platform and scaling issues are solved others can quickly build out similar platforms. It's about the networks and the reach into mobile first countries...posted by stratastar at 7:41 PM on February 19, 2014 [5 favorites]

The big selling points of whatsapp for me were the timestamps and verified receipt of messages. Lots more features than normal texting but nothing super special.

The whatsapp client is also a lot more stable than LINE's client, which is still kind of buggy on Android.

Second, this is an absolutely perfect microcosm to describe the ever-expanding wealth inequality. I'm not saying this as a lament, just as an observation. Technology has fundamentally changed the way that wealth is created, and I believe it's the single largest cause of the wealth gap. Think about it. Thirty years ago, what would it have taken to create $19 billion of value in a new company? How many thousands of employees would it take? How many years, if not decades of hiring people, paying them, paying suppliers, providing pensions, etc? By the time that company was worth $19 billion, so many people would have been involved...that wealth would've been very spread out. Today, thanks to technology, $19 billion was created in a couple years, concentrated in just a couple dozen people. Folks, there is no escape from this. The genie is out of the bottle.

What do they mean wealth was "created"? I would say it was extracted. Facebook is like the Bakken shale in North Dakota -- the resources there may not be infinite, but there sure is a lot of value concentrated in one place, and surely enterprising types are going to be prying it out for a long time to come.posted by escabeche at 7:50 PM on February 19, 2014 [16 favorites]

That Hacker News post it totally on point. There's a real opportunity here for the development of an engaged politics of mutual aid. How do we encourage spreading that money around in ways that benefit our communities?posted by wemayfreeze at 7:51 PM on February 19, 2014

People whose reaction can be summed up as 'who cares about this app/Facebook way overpaid/I've never even heard of it so it must be crap' are missing the huge, huge international audience that Whatsapp has. The world does contain smartphone users outside the US.

Whatsapp were huge in Asia (they're now behind Line and a few others). Were I Mark Zuckerberg, I'd have purchased Line--with all its associated games and stickers that are doing so well--instead of Whatsapp, but even so Whatsapp has a significant international base in areas which Fb is less predominant.posted by librarylis at 7:54 PM on February 19, 2014 [3 favorites]

Folks, there is no escape from this. The genie is out of the bottle.

Oh, man I was watching the thread wondering if someone was going to take it there. 19 fucking billion dollars, it's like a joke in a world where people are begging for $10 minimum wage and bankrupting themselves for medical care. I know we're lucky compared to most of the rest of the world, but it's starting to feel like I have more in common with poor people in India than with the rich people who run the state that I was born and raised in.posted by polly_dactyl at 7:54 PM on February 19, 2014 [27 favorites]

Mutual aid for instance: sponsored endowments for public school systems. Mr or Mr WhatsApp drops $1b into a trust that pays interest out to public school systems in X counties based on need (determined by Y metrics).posted by wemayfreeze at 7:56 PM on February 19, 2014

Also, though, counter to the HN post: a lot of the high paying tech jobs these days are funded out of acquisition money. So the wealth does get spread around to some extent via the funding of new companiesposted by wemayfreeze at 7:58 PM on February 19, 2014

I don't mean to sound so cynical, but I recognize that I am by writing this: ARE YOU KIDDING ME? $19 billion (or, rather, about $10,000,000,000 in actual green money and another $6,000,000,000 to $9,000,000,000 in various current-value stock and stock units) would be enough to build the entireSeattle Transit Master Plan and run it for, oh, about 8 years, and that's just the actual-cash portion. And that includes the crappy streetcar extension to Loyal Heights (with apologies to people who live in Loyal Heights).

The amount of "IT'S JUST Y FOR Z" posts in here reminds me of that old saying that "Modern Art = I Could Do That + But You Didn't".posted by GilloD at 8:11 PM on February 19, 2014 [20 favorites]

I think it's a good thing that only 32 engineers could scale that well. It means that if you have an original idea, you don't have to be rich to capitalize on it.posted by sieve a bull at 8:17 PM on February 19, 2014 [4 favorites]

The numbers shake out like this: FB paid out $4B in cash, $12B in FB stock with a $3B stock bonus if all the employees hang on for three years. So in terms of cash, the cost to FB is "only" $4B and, as was pointed out above, if WhatsApp hits 1B users all paying 1$/year, then FB breaks even (assuming the cost to run the hardware is low, which I expect is true) in 5-7 years.

I don't know how accounting folks deal with this, but the stock that FB pays out costs them essentially nothing (allowing that they could have spent it on something else.) The shares were already in existence, and it's the market that has given them any value what so ever.posted by CheeseDigestsAll at 8:18 PM on February 19, 2014 [1 favorite]

It looks like several unsanctioned libraries that facilitate use of whatsapp got removed from github DMCA takedown notices on Feb. 13th.

https://github.com/github/dmca/blob/master/2014-02-12-WhatsApp.md

This is what a DMCA takedown looks like on github
https://github.com/tgalal/yowsupposted by bdc34 at 8:30 PM on February 19, 2014 [6 favorites]

Yes, CheeseDigestsAll, but there are many, many other things they could've spent even that (relatively puny) $4bn on that would've actually brought in much more money.

So we need to understand that the "money" isn't the thing here, it's what's been mentioned upthread-- Facebook's fear that something like this, either on its own or in the hands of a competitor, could do serious damage to Facebook's future prospects.

Something that is funny is that Blackberry's Market Cap is around $4bn. Imagine if they would've spun BBM out earlier and made it its own company with an existing huge install base :)posted by cell divide at 8:32 PM on February 19, 2014

I love WhatsApp. I have been on it since the beginning as many of my Indian, East Asian, and European tech blogger friends have a group on it. It is more than messaging, it is platform agnostic, network & carrier agnostic, it is nation/region agnostic, and it is private.

Facebook, Twitter and most social networks are public facing. WhatsApp is a mobile only (can be used on wifi) private social network.

If the last decade was about public broadcast sharing, the next is private directed sharing.

I love WhatsApp so much, that last May I called up AT&T and not just cancelled my text plan but had them block it on my account. I have been blessedly text-free since May. Praise the Almighty LTE.

I emailed friends and family, told them I quit, and told them to get on WhatsApp. Last month, my Mom followed my lead and cancelled her text plan and is on WhatsApp.

Yes, it may be seen as just another chat service, but it is mobile only and much like Instagram it has grown much of its power by being mobile first and only.posted by msjen at 8:34 PM on February 19, 2014 [3 favorites]

Don't worry - I'm sure part of the paperwork was: "Don't you dare delete any records before we get our hands on this, even records of people who are deleting their accounts the instant they catch wind of our stink on this deal."

They'll know exactly who you are just from the you-shaped hole you leave behind on your way out.posted by komara at 8:43 PM on February 19, 2014 [4 favorites]

power by being mobile first and only.

Ding ding ding! We have a winner of future!

Just wait until the next-gen wearables (iwatch) don't look so Segway stupid then we'll see some interesting things:

you know how when you're old you start yelling at kids about how they're annoying you by using things you're not cool enough to use because they knew about it a long time ago and by the time you find out about it its not cool anymore

that's happening to me and im not even married and old yet and i don't have a lawn to tell them to get off ofposted by ninjew at 8:49 PM on February 19, 2014 [3 favorites]

I'm a longtime user of both WhatsApp and Facebook and I would have been quite content for them to remain entirely separate entities.

I wonder what FB's plan really is? Use the WhatsApp backend to replace Messenger? Just keep running WhatsApp as an entirely separate entity and hope it generates enough revenue in the longrun to offset the seemingly ridiculous purchase cost?

The people over at BBerry must be wincing however - they could have OWNED this market had they been first to release an effective cross-platform messenger on mobile, but instead they were afraid of competing with themselves and the rest is history.posted by modernnomad at 8:54 PM on February 19, 2014

Not to derail, but please don't suggest people use Telegram. It's security has been shredded, the authors have not done a good job responding to critics, and there are existing, better competitors.

If at all possible, please use and promote WhisperSystems (iOS coming soon, Android available now). It's OTR based, and has introduced some really cool new features, peer reviewed, open source, etc. If you're interested in secure messaging, Pond looks like it could be really cool too -- the author's credentials are fairly strong.

there are many, many other things they could've spent even that (relatively puny) $4bn on

Of course, it's just that the use of stock makes the purchase look more "Internet bubble"-like than it may actually be. If the deal went through, and a year later, FB stock dropped to $0.01, then the cash would be the only real value. Of course, it won't, and so there is a bubble-factor to be considered as well.

The deal still seems a bit crazy to me, but there are defensive purchases that make a great deal of sense. What Google did with Motorola, for example, seems to have been chiefly that. They acquired a bunch of patents, made sure that the Android brand was associated with the hardware, then sold off the hardware division so that other manufacturers wouldn't get nervous about Google being a competitor.posted by CheeseDigestsAll at 9:11 PM on February 19, 2014

I'm pretty sure people at BlackBerry have been wincing since roughly about June 29, 2007.posted by tracert at 9:12 PM on February 19, 2014 [5 favorites]

This reminds me of when Yahoo was running around in the late 1990s overpaying for every trifle like broadcast.com, egroups, geocities, etc.posted by meehawl at 9:12 PM on February 19, 2014 [2 favorites]

There's profit in there. I know someone up above mentioned one stop shop for the NSA but it's more than likely going to become a bit of a pretty big victory in having more data for anything they can legally glean.

Not only that but now they've got outreach into the international market where I'm sure there's all sorts of different privacy laws, some of which are likely not as stringent as the US.
So, it's certainly not about what they're buying that matters, it's what they'll inevitably be selling. Whether that's to/of you, just have to wait and see.posted by ThrowbackDave at 9:13 PM on February 19, 2014

Not only that but now they've got outreach into the international market where I'm sure there's all sorts of different privacy laws, some of which are likely not as stringent as the US.

You have that backwards. The US relies primarily on a market-driven approach to privacy protections, with the occasional legislated protection in certain sectors (eg health, children). The rest of the developed world (and increasingly even much of the developing world) have broad legislative rules about privacy, rather than leaving it to the whims of the market (ie people will pay for privacy if they want it).posted by modernnomad at 9:19 PM on February 19, 2014 [2 favorites]

This reminds me of when Yahoo was running around in the late 1990s overpaying for every trifle like broadcast.com, egroups, geocities, etc.
posted by meehawl at 9:12 PM on February 19 [+] [!]

I wouldn't calculate it that way. $19 billion at a 4% cost of capital is 760 million per year. That adds up to $1.69 per user per year. It's slightly more than a valuation of $1 per user per year, but that's because the company is on an upward trajectory and has future growth factored in.posted by xdvesper at 9:34 PM on February 19, 2014 [3 favorites]

I'm pretty sure people at BlackBerry have been wincing since roughly about June 29, 2007.

I've been thinking about this too. If bbm had been available as an app on the launch day of the app store, and ditto for android they would essentially undefeatable at this point. Free or this cheap for jesse rando, XYZ price for commercial/corporate use.

This app never would have existed. BBM had a huge installed base of young people who were buying blackberries just to use BBM, especially in europe and other places outside the US. BBM usage distribution essentially looked the way whatsapp usage looks now.

For what it's worth, i also said the same thing about MS office and the ipad, and android honeycomb. The door isn't shut on that one though, it's like one of those accessible electric doors that shuts reaaally slowly.

This reminds me of when Yahoo was running around in the late 1990s overpaying for every trifle like broadcast.com, egroups, geocities, etc.

It's hilarious how much facebook is the new yahoo. They're quickly gobbling up enough companies to offer basically every service yahoo did back then, and starting to get in to conflicting and overlapping services like yahoo did as well. I bet this isn't going to be merged into facebook chat, just like how instagram is still completely separate from normal facebook photo albums and everything. The "Email address for your facebook account" change was bizarre and moving in this direction as well.

What's next, they buy sprint and try and be a mobile carrier? Netflix? They're going to start buying really weird stuff now that they're far into the outfield of "weird shit they already do".posted by emptythought at 10:03 PM on February 19, 2014 [4 favorites]

WhatsApp is a giant pain in the ass. I have multiple phone numbers and multiple phones, which I can and do switch around. Whatsapp is 1) tied to one phone number. Nope, we can't use the power of technology to make it possible for you to have one whatsapp account on multiple numbers! What kind of freak are you? 2) tied to a single phone. Oh hey you switched your SIM card to a new phone like a fucking magician. Guess we better make you go through the entire activation process again! Now the other phone is obviously deactivated because the only reason you'd ever do this is because it was destroyed in a fire. Aren't we helpful?!

And yes, I know I'm a special case. I'm the ME case and the only one I care about. I can't believe everyone I know is standardising on this shitty lame product. I will continue to use facebook messaging, magically accessing the same account from all the phones I own, instead of this. You're welcome zuckerberg! But if you take this as a chance to ruin facebook messaging I will kill you.posted by the agents of KAOS at 10:05 PM on February 19, 2014 [4 favorites]

Wow, having never used whatsapp i didn't even think about that. Those are both gigantic fail "features", and are on the same level of the finnickyness and irritating corners you can paint yourself into with iMessage(Wipe an old phone and sell it? Even though it's logged out it might still get your messages lol! sorry we can't help you glhf).

It's kinda amazing you can't just register to multiple phones, or multiple numbers. how hard would it be to just have a simple control panel in the app for that tied to your account?

This is the kind of stuff that bugs me about some "super simple and minimal!" modern software design.posted by emptythought at 10:14 PM on February 19, 2014

I had a Nokia Symbian phone. WhatsApp worked. I had an Android phone. WhatsApp worked. I switched to Windows Mobile 8, WhatsApp works. It's a damned miracle, it's something I depend on to keep in touch with far-flung friends, and if there's a company that can screw it up or make it useless to me it'd be Facebook.posted by 1adam12 at 10:48 PM on February 19, 2014 [1 favorite]

that's a lot of money for something i've never heard of. facebook's p/e multiple requires that it find 3-4 other planets teeming with intelligent life that can be taught earth-style social media in order to vindicate the inherent growth projection.posted by bruce at 11:08 PM on February 19, 2014 [9 favorites]

This is the kind of stuff that bugs me about some "super simple and minimal!" modern software design.

Sounds like they may have turned the corner from creating tech products that meet users' individual needs into viewing users as irritants just for having individual needs.

It should end with Zuckerberg trying to buy contact lists off of people's phones on the street like some kind of deranged panhandler and MLM shill.

Also, I want to see a video recording of the big reveal when they finally mine all that tasty data and cross-breed it with their own and realize that it pretty much already matches their own database networks.

"Wait, what just happened? I told you to cross reference the WhatsApp data and overlay it on our master db!"

"I... I did. I think there's a bug. Let me check the code and run it again."

"Still the same. Run it again."

"Sir? Uh... the connections... they appear to be 99% the same."

"What!?"

"Ah, maybe more actually."

"DO YOU HAVE ANY IDEA WHAT 19 BILLION DOLLARS LOOKS LIKE!? I DO. I WENT TO PRINCETON! Fine, let's mine the messages for marketable trends."

The big selling points of whatsapp for me were the timestamps and verified receipt of messages. Lots more features than normal texting but nothing super special

I've been on whatsapp for a while now, mainly because my "free unlimited" text plan charges for picture messages (so not free or unlimited, then.) But I've just switched to Viber which has the same timestamps/verified receipts feature, but also gives me free phone calls, (including international) a cute interface, and now I find the benefit of not being linked to FB. I'm feeling smugly ahead of the curve right now. For once.posted by billiebee at 1:10 AM on February 20, 2014

WhatsApp is fantastic for sending photos to people without having to pay ridiculous MMS charges. I can show my husband the neighbourhood cat being adorable and get pictures of my nephew at the same cost, despite the nephew being several thousand miles away.

So I'm disappointed, and am definitely looking for a replacement.posted by Katemonkey at 1:14 AM on February 20, 2014

Shutter, you beat me to it.posted by MikeKD at 1:37 AM on February 20, 2014

Viber was bought by Rakuten for $900million just a few days ago. They have a userbase of 300 million. That news was met with a drop in Rakuten share prices because “So far Viber has not done well in monetization, so that is the task for Rakuten,”.

This What'sApp/FB deal is like reading the same news with different names and imaginary numbers.posted by like_neon at 1:45 AM on February 20, 2014 [2 favorites]

NounNoun is the new new thing. Quick, Zuck, it's sneaking up on you! Drop 120 tons of cash on top of it to smother it before it grows!posted by benzenedream at 2:01 AM on February 20, 2014

I got to feel smug for approximately 16 minutes. Thanks like_neon!posted by billiebee at 2:34 AM on February 20, 2014

I'm surprised that everyone is so puzzled by this acquisition. It's about getting access to a giant population of people who live outside of the teenage-fashion-driven US social media bubble.

I live in a world of middle-aged Spaniards where most people don't use Facebook and don't care about the hot social media app of the week. Whatsapp was the killer app that made people get their first smartphone. Within a year of launch, while it was still free, everyone I knew was using it. Abusive SMS rates were the motivator at first, but eventually it was just that all your friends were using it. And it was dead simple.

When they moved to charging for it, everyone got worried, had a look a Viber, and found that their friends weren't on it and the voice calls usually didn't work. So we all paid our 1 euro a year, and Whatsapp managed to monetize their users without pissing them off.

Their should be some lessons here about how to reach the next couple of billion users. "No ads, no games, no gimmicks" is a brilliant slogan. People want simple utilities that let them communicate with their friends, and nothing more. But those sound like the kind of lessons that the Silicon Valley hype machine doesn't want to hear.posted by fuzz at 2:53 AM on February 20, 2014 [8 favorites]

Using Whatsapp means effectively uploading details of all the contacts in your address book to their servers. But I don't trust Facebook one little bit with that information so I'm really reconsidering using Whatsapp now.

I mainly use it to talk to a friend in Hong Kong, where the second choice would be WeChat. Do I trust the Chinese Government with my information more than Facebook?posted by kerplunk at 3:26 AM on February 20, 2014 [1 favorite]

I know about Whatsapp because of all the Whatsapp spam I get.posted by Mezentian at 3:29 AM on February 20, 2014

FB cost of capital is only 4% if you think it's equity has zero value long term and that the risks inherent in this deal are akin to buying a mature utility.

Anywhoo the right way to think about the price IMO is 4Bn +10% of facebook. Btw those shares didn't already exist - they are being created and therefore represent a dilution of existing shareholdersposted by JPD at 3:48 AM on February 20, 2014 [1 favorite]

For me this shows how good Mark Zuckerberg is, both in selling the deal who WhatsApp (who could have stayed independent, or sold to someone else), and in selling the deal to the rest of the Facebook board, including people like Marc Andreessen and Peter Thiel.

It also shows how Facebook are focussing on buying other companies that are absolute leaders in their field - include Instagram in that - in terms of user numbers.posted by DanCall at 5:00 AM on February 20, 2014

He sealed the deal by paying an absurd amount of money and giving up a board seat.

Nothing about this surprises me, and the fact that it is shocking to people is interesting.

I think the public does not quite understand the motives or why a company like Facebook is valuable in the first place. Facebook looks good to investors because a) it has proven, sustained growth, and b) it collects an enormous amount of user data to mine. User data is extremely valuable. A huge amount of the operating cost for any corporation that sells to consumers directly is advertising. The holy grail of advertising is being able to increase your conversion rate on ads by learning something about a user's intentions – e.g.:

Is this guy slightly more likely to buy a Lexus or a Toyota hybrid? If I show this guy the same ad twenty times in a row, is he more likely to click it or is he going to get irritated and be less likely to click it? What if he doesn't click on the ad but the ad implants an idea in his head (Must buy Lexus) that leads him to look at the Lexus Facebook page later that day? Should we try to advertise to him then?

As the company paying for the advertising, I want to know the answers to these questions so I can tell if I'm investing my ad dollars wisely. (And remember, ad dollars make up a huge portion of overall spending, so any savings go straight to the bottom line. If the world's largest advertisers were able to reduce their ad spending by, say, 20%, you can imagine the impact it would have on their shareholder value.)

Any company that owns both data about users AND controls access to the ability to advertise to those users looks like a gold mine to advertisers. Facebook matches that profile exactly. It is every advertiser's wet dream. It also looks good to investors, because if Facebook can target ads that convert better than anyone else's ads, then advertisers will pay a premium to buy ads on Facebook and its many affiliates.

So to Facebook, it is important to both maintain the growth of its user data and to squash any potential competition, which it can only accomplish by absorbing, amoeba-like, other social networks, whether or not they are actually profitable. Facebook has to become the walled garden of the Internet in order to maintain its value proposition to investors. The way this will turn out is either a) Facebook makes good on its promise to transform its data into advertising value, or b) it fails, investors lose hope, and every social networking site collapses overnight as all the VCs run away and hide under a rock. Sort of the Ragnarok of Web 2.0. Then we rebuild society from scratch. The internet resets back to the halcyon post-AOL days of 1998-99, country-tinged rock makes a comeback, and Google dances over the corpse of Facebook.posted by deathpanels at 5:45 AM on February 20, 2014 [13 favorites]

Most of the pay monthly mobile tariffs in the UK have unlimited texts. I have used Viber, but I was suspicious about it's memory and power use and it didn't give me much benefit in connectivity at the time as I was only using wifi for data. I just installed WhatsApp so that I could text a friend who moved to the US as she uses it. I didn't like the fact that it squirted my phonebook back to the mothership, but I figured that this is par for the course with any similar app.
That FB is flailing around trying to assimilate any tasty looking company it can get it's hands on is not surprising, but it doesn't show much faith in the FB brand.posted by asok at 6:27 AM on February 20, 2014

yes - I suspect that's the way this will end - free international texting will be included in mobile tariffs. Right now businesses like this only exist because the mobile carriers were charging far more than the cost of sending an SMS.posted by JPD at 6:44 AM on February 20, 2014

So to Facebook, it is important to both maintain the growth of its user data and to squash any potential competition, which it can only accomplish by absorbing, amoeba-like, other social networks, whether or not they are actually profitable. Facebook has to become the walled garden of the Internet in order to maintain its value proposition to investors. The way this will turn out is either a) Facebook makes good on its promise to transform its data into advertising value, or b) it fails, investors lose hope, and every social networking site collapses overnight as all the VCs run away and hide under a rock. Sort of the Ragnarok of Web 2.0. Then we rebuild society from scratch. The internet resets back to the halcyon post-AOL days of 1998-99, country-tinged rock makes a comeback, and Google dances over the corpse of Facebook.

that's fine - but FB can only do about 8-9 more deals like this before its completely diluted its current shareholders - so then how possibly could you want to own the shares?posted by JPD at 6:47 AM on February 20, 2014

This is why I 100% believe Jan Koum when he says that WhatsApp will remain autonomous, at least from a product and branding perspective. To glom WhatsApp onto Facebook-the-product would be to throw away exactly what makes WhatsApp valuable to Facebook-the-company – that it’s not Facebook-the-product. It is better to think of Facebook-the-company as a conglomerate: Facebook-the-company builds, acquires, and manages multiple products that serve all the different segments of social. The largest and most well known product in their portfolio just happens to be called “Facebook” as well.

I'm just not seeing how WhatsApp has a lock on all those users. There have been so many chat/text systems over the years: ICQ, AIM, MSN Chat, Yahoo Chat, Google Chat/Hangouts, SMS, Facebook Chat, BlackBerry, etc. I'm finding it hard to see how Facebook can extract that much money out of WhatsApp's before its users wander off to the next hot chat/text/sharing thing.posted by octothorpe at 7:07 AM on February 20, 2014 [1 favorite]

Also Satmar Chassidic rabbis are furious that WhatsApp lets people get share photos and videos and IMs while still technically following their prior ban on internet use. So there's that.posted by Mchelly at 7:15 AM on February 20, 2014 [1 favorite]

I had never heard of this service before reading this post. Doing a little research, it seems like an idea that makes sense if you send more texts in a week than I have in my whole life.posted by Kwine at 7:16 AM on February 20, 2014

The way this will turn out is either a) Facebook makes good on its promise to transform its data into advertising value, or b) it fails, investors lose hope, and every social networking site collapses overnight as all the VCs run away and hide under a rock.

Considering the dilution of the FB user base that you can actually extract additional monies from this should happen in the next year or so. I'll keep the Ciroc stocked, you bring the Pantera and Killer Mike for the post-click bait society party.posted by playertobenamedlater at 7:21 AM on February 20, 2014 [1 favorite]

Facebook, Twitter and most social networks are public facing. WhatsApp is a mobile only (can be used on wifi) private social network.

That's not strictly true, and anyway FB has had private messaging for a long time that (at least on my phone) can replace/supplant the sms messaging system. The FB app on android is annoying if you only use it check FB occasionally, because it is constantly prompting you to enable the chat feature.

Same with Google Hangouts, although at least hangouts will take the hint and act like a discrete app if you ask it to.

So, the thing I don't understand is - besides a userbase that isn't particularly tied to the application - what the app brings to FB that FB doesn't already have or couldn't develop for less than the ~19billion dollars this app cost them.posted by Pogo_Fuzzybutt at 7:22 AM on February 20, 2014

It's an amazing price. I assume this is all about Facebook buying access to a customer segment they currently have little connection to. How do you grow from 1B users? You buy another 450M.

I've been curious to read who else was bidding to get the price to that point, there are very few buyers who could afford $16B. octothorpe's link about a $10B offer from Google comes from Jessi Hempel's tiny article; hoping more detail comes out, although it may never.

This article about the deal closing says the deal got serious and term sheet prepared in only 10 days. And largely negotiated by Zuckerberg himself. That's all consistent with how Facebook bought Instagram, but it's a pretty crazily self-confident move for a deal of this size. The article almost certainly is sourced from Facebook itself so either it's true or it's what the company wants people to believe.

Notable that Whatsapp and Facebook messaging are both based on Erlang / Ejabberd. Makes for an easier integration I suppose.posted by grubby at 7:31 AM on February 20, 2014

As the company paying for the advertising, I want to know the answers to these questions so I can tell if I'm investing my ad dollars wisely.

In theory, sure. In practice, I've heard nothing good about Facebook ads from the people who buy them. Yes, they let you slice the demographics six ways from Tuesday, but there seems to be a consensus that this doesn't really result in a better conversion rate. The few very-small-scale Facebook ads I've bought have ended up being basically useless, with the same very small amount of money going much further on Google and other platforms. Maybe things are different at the millions-of-dollars-in-ad-budget level, but that's not what I've heard.posted by enn at 7:39 AM on February 20, 2014 [5 favorites]

Nelson, I loved this quote from the article:

Sequoia partner Jim Goetz was persistent, spending eight months working his contacts to get either founder to engage. He’d met with a dozen other companies in the messaging space like Pinger, Tango and Baluga, but it was clear WhatsApp was the leader, and to Goetz’s surprise the startup was already paying corporate income taxes: “The only time I’ve seen that in my venture career.”

Notable that Whatsapp and Facebook messaging are both based on Erlang / Ejabberd. Makes for an easier integration I suppose.

So glad we replaced incompatible, walled garden IMs with XMPP based and artificially walled garden IMs.posted by jaduncan at 8:53 AM on February 20, 2014

It's an amazing price. I assume this is all about Facebook buying access to a customer segment they currently have little connection to. How do you grow from 1B users? You buy another 450M.

Shame that most of my whatsapp contacts are already on fb then. Companies like Facebook or Google like to pretend that everyone has a single social identity, but that isn't true. When user data is the main asset of your company, don't be shocked if I take my private conversations away from your app/site. An independent Whatsapp with some kind of encryption could have gone places, c'est la vie.posted by ersatz at 9:08 AM on February 20, 2014

Which just blows my mind since they already bought a far superior product which they then sat on for a few years before removing all the features that made it compelling and halfheartedly shoved the remaining bits into a spot in their other products without actually performing any integration.

(Why yes, now that you mention it I am still bitter about Grand Central being lobotomized into the much worse Google Voice.)posted by fader at 9:19 AM on February 20, 2014 [4 favorites]

Interesting that so many people here have never heard of this. Whatsapp is so big where I live (in the Netherlands) that practically everyone with a smartphone has it (not exaggerating, I don't know a single person who doesn't have Whatsapp). Mostly because texts are sometimes expensive, but also because, as was said before, that it makes it REALLY easy to send pictures quickly. Way faster than with email. Also, everyone uses it, so you kind of are expected to.

I don't know anyone with an Android phone who actually paid that $1 though. I know it is supposed to cost money after the first year, but I don't see most people paying that and so far the app seems to keep working just fine without paying. In order to buy apps on Android you have to add a credit card to your account. Many people here don't have credit cards or don't want to add it to their Google account and a huge portion of those Whatsapp users are children who cannot even get a credit card if they wanted to. iOS has gift cards that you can buy in stores, but Android doesn't have that yet where I live, so many people only use free apps on Android. So, I don't believe they are actually making 450 million a year.posted by blub at 9:45 AM on February 20, 2014 [3 favorites]

"I worry about what [an acquiring] company would do with our population: we've made such an important promise to our users—no ads, no gimmicks, no games—that to have someone come along and buy us seems awfully unethical. It goes against my personal integrity."

That's from one of the cofounders. I certainly don't fault anyone at WhatsApp for taking the kind of money they're getting (forget the stock options, just the cash on the table is pretty staggering). At the same time, I find it funny that 2 months ago he felt strongly enough about acquisition to say something like this.posted by sparkletone at 9:45 AM on February 20, 2014 [2 favorites]

It doesn't seem inconsistent though given Zuckerberg's public statements so far that they intend to leave it pretty much alone (as they mostly did with Iinstagram) and the seat on the board as part of the deal.posted by TwoWordReview at 9:51 AM on February 20, 2014

Facebook added inline ads to Instagram that are nearly indistinguishable from legitimate posts. I would hardly call that leaving it pretty much alone.posted by enn at 10:24 AM on February 20, 2014 [2 favorites]

"Sir? Uh... the connections... they appear to be 99% the same."

What...nobody at Facebook says "Sir."posted by sweetkid at 11:01 AM on February 20, 2014

Euro-opinion: international texting is expensive. The borders are becoming arbitrary, but cell phone companies are making so much money in Europe from "international roaming" (read: I went grocery shopping in the nice supermarket 6km from my place, which happens to be in a different country).

Texting friends who live across the border is about 0.15 Euro/text (it's regulated now). Whatsapp costs 1 euro a year, instead of spending 15 euros/month on international texts.posted by sockpuppetdirect at 11:56 AM on February 20, 2014 [1 favorite]

Facebook added inline ads to Instagram that are nearly indistinguishable from legitimate posts. I would hardly call that leaving it pretty much alone.

I'll bet you $19 billion that the ads were already on the roadmap when Instagram was acquired. IG had no revenue prior to the ads and I'm sure that was always their revenue plan.posted by wemayfreeze at 12:16 PM on February 20, 2014

Facebook added inline ads to Instagram that are nearly indistinguishable from legitimate posts. I would hardly call that leaving it pretty much alone.

I've noticed this too. What's amusing to me is that this is the basically the same thing tumblr's done with ads in their official apps, but one can always spot the sponsored posts because they stick out like sore thumbs in the sea of cute animals/fandom stuff/porn.posted by sparkletone at 12:44 PM on February 20, 2014

Using Whatsapp means effectively uploading details of all the contacts in your address book to their servers. But I don't trust Facebook one little bit with that information so I'm really reconsidering using Whatsapp now.

iOS has been trying to sneak this one in since i think, v6? Android as well, because when you install the facebook app it goes "this app wants access to your contacts and bla bla bla" on the big list of things it can do. You don't even really get to deny that, as i remember.

Basically what i'm saying is that not only did you probably already do this when you installed the facebook app since it does it by default and you have to fuck around to stop it, but pretty much every average person who has a smartphone likely just smashed "ok" over and over until it opened and did it without even realizing.

Basically, this is giving them info there's a high chance they already have unless you're very on-the-ball about blocking them from grabbing it.

I'll bet you $19 billion that the ads were already on the roadmap when Instagram was acquired. IG had no revenue prior to the ads and I'm sure that was always their revenue plan

Or, if you wanna be super cynical, you can think that they really had no intention of implementing that and were just leaving it up to whoever inevitably bought them.

That was my thought about tumblr. The real revenue model of a lot of these companies is "get purchased by someone else".posted by emptythought at 12:49 PM on February 20, 2014 [1 favorite]

that's fine - but FB can only do about 8-9 more deals like this before its completely diluted its current shareholders - so then how possibly could you want to own the shares?

Facebook investors are not normal people. They are VCs and big financial firms, and they're betting that during Ragnarok, Facebook succeeds in its dark mission to become a global advertising and marketing platform. There is a good chance that the whole thing will fall apart, but that's the risky nature of the investment. Buzzworthy tech companies can alter the time/space continuum of the market and make crazy long-shot bets seem like once in a lifetime opportunities to become ridiculously wealthy through early investment.

WhatsApp is fantastic for sending photos to people without having to pay ridiculous MMS charges.

Yep, we ended up getting it on our phones because someone who moved here from Argentina used it and we wanted to be able to share pictures. We'd never heard of it before July of last year and she's still the only person we contact though it. She, on the other hand, is in incessant contact with folks who still live in Argentina and former coworkers in Dubai.

When it showed me the list of people in my contacts who also have WhatsApp I was somewhat surprised since none of them had ever said boo to me about the app. However in looking at the list again I suspect better than half of those people have it on there because of foreign national friends, like us.

What was interesting about that list in light of this FB purchase is that my contact list is full of aggressive texters/iMessagers and people who are pretty constant fb/tumblr/twitter users... and I don't think a single one of those people showed up in my WhatsApp list. So if that's at all true for people beyond me then maybe Zuckerberg really did acquire a potential growth group of users.posted by phearlez at 2:23 PM on February 20, 2014

I never heard of WhatsApp until August when my daughter went to China and couldn't use her regular smartphone for varying reasons. So we were able to text back and forth very easily and for free until her email and other connections were set up.posted by etaoin at 5:44 PM on February 20, 2014

I should mention that Whisper Systems is owned by Twitter, but the project is open source. This may bother some but I think your irrational hatred would be misplaced in this case.posted by tracert at 3:27 PM on February 24, 2014

Google did not bid for WhatsApp. Google senior VP says "Whatsapp was definitely an exciting product ... We never made an offer to acquire them. Press reports to the contrary are simply untrue."posted by Nelson at 2:12 PM on February 26, 2014

So it has been about three weeks and all the people I regularly What's Apped with are already on Telegram. I am stunned that this happened so quickly. All the 10-14 year olds in the neighbourhood switched too. According to my kid What's App is old-fashioned, Telegram is the new thing. I had expected a switch if Facebook started to change things, required a Facebook login, or something like that, but not that this would go so fast. Like I said before: What's App is everywhere here, every single person I know who has a smartphone has What's App, so it seems quite a big deal to me that so many people installed Telegram so quickly after the acquisition.posted by blub at 1:36 PM on March 9, 2014 [1 favorite]

There was also a big WhatsApp outage around the same time, wasn't there?posted by grouse at 1:51 PM on March 9, 2014

Yes, but apparently Telegram was down then too (because of the huge growth in Europe) and that didn't make people switch to yet another app. Also, according to Dutch news reports after the acquisition about a third of Dutch What's App users said they would switch to something else because of that. I notice that many people who had no intention of switching also don't have any problems installing Telegram if their friends or family are on it. "It's free, it's no trouble, so why not" seems to be a common thought. Yesterday I was with family and asked them why they installed Telegram and they actually asked me in return (I'm the IT person in the family) "yeah, what's up with that, why is everyone on there all of a sudden, is there something wrong with What's App now?" but even though they didn't have a pressing reason themselves, or anything against What's App, they still installed it.

One benefit of all this is that less people will be using the word What's App as a verb. "I'll What's App you" just sounds ridiculous. Some people shorten it as "I'll app you" but that sounds perhaps even worse. "I'll telegram you" still sounds funny to me and when it stops being funny it will at least not be irritating.posted by blub at 1:28 AM on March 10, 2014 [3 favorites]

I'm still kind of amazed that there's that much momentum and outright hate for facebook. it's sort of like the general miasma of hate around google and everything google that exists now too.

it was seriously, 5 years ago that those companies were if not blatantly cool at least generally accepted as a sort of neutral all-encompassing force in communication and the internet. And now they're so "uncool" that them buying something makes people bail in droves.

People seriously hate them more than microsoft, since MS buying skype didn't kill that.

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